THE CASE

The claimant succeeded at trial 100%. An offer to settle at 90% had been made. At an earlier hearing the judge determined that this was an effective Part 36 offer. The parties returned to court after the defendant raised the issue of whether the claimant was entitled to the “additional amounts”. The judge referred to the earlier decision where this issue has not been raised.

THE JUDGMENT

I was not at that stage asked specifically to consider whether I had the power to award the additional sum conferred by CPR 36.17(4)(d) and no point was taken on behalf of the Defendant about the benefits conferred by that provision.

For convenience, I should set out the part of the rule which deals with the nature of the benefits arising in the situation to which I have referred:

“(4) Subject to paragraph (7), where paragraph (1)(b) applies, the court must, unless it considers it unjust to do so, order that the claimant is entitled to –

(a) interest on the whole or part of any sum of money (excluding interest) awarded, at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;

(b) costs (including any recoverable pre-action costs) on the indemnity basis from the date on which the relevant period expired;

(c) interest on those costs at a rate not exceeding 10% above base rate; and

(d) provided that the case has been decided and there has not been a previous order under this sub-paragraph, an additional amount, which shall not exceed £75,000, calculated by applying the prescribed percentage set out below to an amount which is –

(i) the sum awarded to the claimant by the court; or

(ii) where there is no monetary award, the sum awarded to the claimant by the court in respect of costs –

[prescribed percentages are set out]”

An issue has now been raised on behalf of the Defendant as to whether the “additional amount” that is ordinarily to be awarded under sub-paragraph (d) (“unless the court considers it unjust to do so”) is payable because there is as yet no “sum awarded to the claimant by the court”. It is argued that the decision on liability does not constitute “the sum awarded to the claimant” under CPR 36.17(4)(d)(i) so that the only sum by reference to which the additional sum could be calculated would be the sum awarded to the claimant in respect to the costs of the liability trial under CPR 36.17(4)(d)(ii). It is argued that an effective Part 36 offer on liability is not to be treated in effect as an effective offer by a claimant for a sum of money in respect of the claim for damages as a whole.

Mr Nolan makes the point that in my Ruling on Costs I had said that one of the consequences of my decision was that the Claimant should receive an additional amount “to be determined after the damages had been assessed pursuant to Rule 36.17(4)(d)”: see [5] of the Ruling. He also says that he made it clear in his written submissions in support of the application he made that he sought such an order. He also says that Mr Westcott’s response noted the terms of the application, but there was no submission made along the lines of the submission now made on the Defendant’s behalf. He also draws attention to the fact that no attempt was made to invite me to re-consider the Ruling when it was sent in draft to the parties before it was handed down in final form on 7 February. He has referred me to Venetia Robinson v Roland Fernsby, Duncan Scott-Kilvert[2003] EWCA Civ 1820 and says that the position in this case is “akin” to that case. Against that background, he submits that the issue is res judicata.

I agree with him that this point, if it was to be raised, should have been raised at some stage before the Ruling was handed down in its final form. However, I am not sure that I can accept that the issue can be res judicata if, as I think is the case, the point goes to the jurisdiction of the court at this stage to make the award sought. If I had made an order for an “additional sum” which I was subsequently persuaded I had no jurisdiction to make, notwithstanding that no-one raised the jurisdictional issue at the time, it would have been appropriate for me to recall any order made and put the matter right. It is a well-established principle that the parties cannot confer upon the court by consent or default a jurisdiction which it does not otherwise possess. That distinguishes the situation here from the kind of situation with which Robinson v Fernsby was concerned and other cases have dealt. However, no order has been made following that earlier Ruling and, accordingly, there is even greater flexibility in dealing with the point that has now been raised. (Indeed, it is I who called for further submissions on the point when I had read more fully the terms of Rule 36.17(4)(d).)

Mr Robert Marven QC, who has been instructed to make representations on the overall argument, has submitted that the issue cannot be res judicatabecause I did not decide (because I was not called upon to do so) what the consequences of this part of Part 36 were in the circumstances of this case. I think that is also correct.

Whichever approach is adopted, I consider that the issue remains open or should be treated as open. For reasons that will become apparent in due course (see paragraph 16 below), I consider it in the Claimant’s best interests that I treat the issue as remaining open.

Mr Nolan’s substantive argument in response to that raised on behalf of the Defendant is that the terms of CPR 36.17(4)(d)(ii) are for cases where the subject of the proceedings is something other than money. The present award should, he submits, be seen as “a monetary award” because it is an award of “damages to be assessed”. This would mean that Part 36.17(4)(d)(ii) is not engaged and that 36.17(4)(d)(i) should be interpreted as including an award of damages to be assessed.

Mr Marven’s first submission is that Part 36.17(4)(d) is not engaged at all because this case has not been “decided” according to the rules. According to Part 36.3(e) a case is “decided” when “all issues in the case have been determined, whether at one or more trials”.

In my judgment, Mr Marven is correct in this submission. This part of the proviso is, in my view, clear, namely, that there is no power to award any additional sum until “all issues in the case have been determined” and if that means more than one trial is required, then the power exists only when those trials have been concluded. If the provision could be read as permitting the award of the additional sum when, in a case where liability is determined as a preliminary issue, that issue has been determined, then the power to make the award would arise. But the rule speaks of “all issues in the case” and I am unable to see how a claim for damages for breach of duty can have been “decided” until both elements of the claim have been “determined” by the court.

That does seem to me to preclude the making of an award of an additional sum at this stage. Does it mean, as Mr Marven contends, that the rule can only operate “on an effective offer in respect of the claim as a whole“? I do not think so. Acceptance of that proposition would arguably neutralise the clear intent of this provision, namely, to encourage claimants to make offers on specific issues (such as breach of duty) and defendants to give them serious consideration with potential adverse consequences for the defendant if a clearly appropriate offer by a claimant has been rejected (see generally paragraph 36.17.4.4 of The White Book 2017).

The second aspect of the proviso at the beginning of sub-paragraph (4)(d) is that “there has not been a previous order under this sub-paragraph”. It follows that there can be only one order for an additional amount in any case. In the commentary in The White Book 2017 the following is said at [36.17.4.4]:

“The words “provided that the case has been decided and there has not been a previous order under this sub-paragraph” at the beginning of r.36.17(4)(d) were introduced with effect from 6 April 2015 when Pt 36 was re-enacted …. A case is “decided” when all the issues in the case have been determined, whether at one or more trials (r.36.3(e)). This amendment is designed to ensure that in a given case there should be only one “additional payment” even though several successful claimant’s Part 36 offers relevant to different issues may have been made.”

This passage suggests that there could be more than one claimant’s Part 36 offer in existence which prima facie qualifies for an “additional amount” at the time the court is invited to exercise the jurisdiction conferred by r.36.17(4)(d). In that situation, the court presumably has to decide, in the exercise of its overall discretion (afforded by the words “unless the court considers it unjust to do so”), which offer provides the claimant with the appropriate level of “additional amount” in the circumstances and thus make one award within sub-paragraph (4)(d) or how any overall “additional amount” is spread between the various qualifying offers.

Although Mr Marven says that it is “not disputed that the court should deal at this stage with the costs of the liability issue”, I do not think I am obliged to do so. For my part, I would leave open for further argument the question of whether a claimant’s Part 36 offer which was effective for this purpose on the issue of breach of duty could give rise to an additional amount calculated by reference to the “sum awarded to the claimant” when that sum has been determined. I do not have to decide that at this stage. If I was specifically invited to make an order under r.36.17(4)(d) at the present time, it could only operate on the costs of the proceedings to date because there has been no “sum awarded to the claimant” and thus no “monetary award“. If I made such an order, because of the second part of the proviso to which I have referred above (see paragraph 14), the Claimant would not be able to seek another order under r.36.17(4)(d) if, say, he made another offer in relation to damages that was “at least as advantageous to [him] as the proposals contained in [the] Part 36 offer.” Since the Claimant is a “protected party” and any additional sum awarded should be for his benefit, I do not consider that it would be right for me to take any step now that would preclude the possibility of obtaining some enhanced award in that situation.

I do not think that the Claimant is in any way prejudiced by this decision. To borrow Mr Marven’s everyday expression, the Claimant has an effective Part 36 offer on liability “in the bag” and he is prima facie entitled to the additional relief set out in r.36.17(4). That is apparent from the Ruling on Costs and indeed this Ruling. If his advisers wish that to be recorded in the order giving effect to those two Rulings, so be it, but no order for an “additional sum”, whether under r.36.17(4)(d)(i) or (ii), will be made until “all issues in the case have been determined”. If the claim for damages is settled in due course, it will be open to the Claimant, in default of agreement as to the consequences, to restore to the court the issue of the payment of any “additional sum” arising from the Part 36 offer on liability.